It's easier to figure out your teenage daughter than the stock market these days.
But since both probably drive you to drink, look no further than the wine in your glass for your next investment.
Investing in the wine world has gotten so much easier. Granted you must always be diligent about counterfeit bottles, but thanks to auctioneers like Sotheby's and Winebid, there's much more transparency and liquidity in the market.
And quality bottles are going for top dollar. The wine collection of late Chesapeake Energy Corp. co-founder Aubrey McClendon broke records recently and sold for $8.44 million, which was above the estimated range, according to Hart Davis Hart Wine, the company that ran the auction.
Much like picking stocks, the variables matter. In the wine world:
- The vintage, or year, of the wine matters. Certain years are just better than others.
- Supply is key. If there was a limited production of a superb wine, you can expect the price to be higher.
- Storage is key. Make sure the wine was kept in a temperature-controlled cellar.
So education is necessary before you buy and hold.
There is actually an exchange, where you can see in real-time the value of your bottles. The London International Vintners Exchange, the Liv-ex, is a global fine wine marketplace, subscription-based and used strictly by fine wine merchants. Regular collectors can view this data at cellar-watch.com for about $94 a year though. The fine wine analysis at the Liv-ex blog is also free.
So check it out. Wine typically is traded by the case, though really rare, low liquidity wines are traded by the bottle.
The Liv-ex 100, a basket of 100 fine wines, is up 16.2% year-to-date and 14.56% year-over-year compared to 4.8% and 12.17% respectively for the Dow.
But much like it's a stock pickers market, the same holds true in the wine world. Certain bottles have been on fire.
For instance, according to Liv-Ex:
A case of the 2002 Opus One, a joint venture between Napa Valley's Robert Mondavi and Chateau Mouton Rothschild, is up 104% over the last five years, beating the market, which rose only 79% over that duration.
Two More Things If You Want to Start Buying Wine
- Whether it's your own wine fridge or a professional storage unit, store your wine on its side, at the proper temperature. Don't think you can buy expensive bottles, for investment purposes, keep them on the floor of your closet and expect them to resell. Sure they may surprise you, but they may also taste like vinegar.
- You have to be willing to wait anywhere from five to ten years -- maybe more -- for some of these good bottles to age and truly be considered an investment.
So start watching the index.
And if all else fails, and the teenage drama is just too much to handle, unlike your loser stock picks, you can always drink your wine investments.